China Southern Cargo received its AOC as the parent group separates from its cargo operation business.

The new C hina Southern Cargo activity received its AOC from the South Central China Civil Aviation Administration earlier this month, the carrier announced through its official Weibo account.

The new division will be based in Guangzhou and will be fully owned by China Southern and documents seen last year show that the freight company will have a registered capital of C ¥ 1 billion ($ 150 million).

It will operate Boeing 777 cargo aircraft on national and international cargo flights. According to its latest annual report, China Southern operates 14,777F and two 747-400F.

In its initial filing, China Southern said it would hand over its existing freight slots to the new subsidiary.

China Southern also said that the head of its Shantou division, Zhang Wei, will lead the new carrier and move around 30 flight crew members to the cargo airline.

The move comes as China seeks to reform state-owned enterprises through a mixed ownership model, with the state being a shareholder in companies without managing them on a day-to-day basis.

China Southern is not the only Chinese airline to have adjusted its cargo operations in recent years as part of government reforms.

In September 2018, Air China announced that it would sell its 51% of the capital of Air China Cargo in the sister unit Capital Holding.

And in 2017, China Eastern Air Holding (CEA Holding) sold a 50% stake in Eastern Air Logistics, which in turn owns 83% of freight operator China Eastern, to four companies.

In the first seven months of the year, the airline saw its cargo volumes increase 9.6% year on year to 860,110 tonnes.